[Senate Report 105-369]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 613
105th Congress                                                   Report
                                 SENATE
 2d Session                                                     105-369
_______________________________________________________________________


 
        FALL RIVER WATER USERS DISTRICT WATER SYSTEM ACT OF 1997

                                _______
                                

  October 6 (legislative day, October 2), 1998.--Ordered to be printed

_______________________________________________________________________


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 744]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 744) to authorize the construction of the 
Fall River Water Users District Rural Water System and 
authorize financial assistance to the Fall River Water Users 
District, a nonprofit corporation, in the planning and 
construction of the water supply system, and for other 
purposes, having considered the same, reports favorably thereon 
with amendments and recommends that the bill, as amended, do 
pass.
    The amendments are as follows:
    Page 4, line 14-15, strike ``the Interior, acting through 
the Director of the Bureau of Reclamation.'' and insert ``of 
Agriculture''.
    Page 9, line 17, after ``Secretary'' and before ``may'' 
insert ``of the Interior, acting through the Director of the 
Bureau of Reclamation''.

                         purpose of the measure

    The purpose of S. 744, as reported, is to authorize the 
Secretary of Agriculture to participate in the construction of 
a rural water system in South Dakota on an 80-20 cost-share 
basis with an authorization ceiling of $3,600,000. The 
legislation also makes Pick-Sloan power available for the 
system through a preference customer at the firm power rate.

                          background and need

    The Fall River Water Users District is located in southern 
South Dakota on the South Dakota-Nebraska border in Fall River 
County. The District covers about 460,000 acres with a 
population of 660 persons. In 1990, area homeowners and 
ranchers formed the Fall River Water Users Association to start 
the process for development of a rural water system because of 
severe drought conditions and lack of water for domestic and 
livestock needs. Currently, residents rely on shallow wells 
within the District that are not of the quality or quantity 
required for domestic and livestock use. Portions of the 
proposed rural water system area have serious quality concerns 
as the water is high in nitrates, sulfates, and total dissolved 
solids. Past cycles of severe drought in the southeastern area 
of Fall River County have left residents without a satisfactory 
water supply and many residents must haul water for all uses, 
some as far as 60 miles round trip. An engineering report that 
included an income survey was completed in 1992 to qualify for 
the Rural Development Water and Waste Disposal grant and loan 
program. The project, however, does not meet some of the 
criteria for programs under the Department of Agriculture and 
applications for assistance have been rejected twice. According 
to a Government Accounting Office report (GAO/RCED-98-204R 
Rural Water Projects), the second application, which was 
submitted under the ``Water 2000'' initiative in 1996, was 
rejected when the Department of Agriculture determined that the 
project was not feasible and would result in monthly fees more 
than double the highest user fees in South Dakota. The report 
commented that the Director of the Rural Business Program at 
the Department of Agriculture stated that the project would 
need a direct appropriation from the Congress with very high 
grant percentages in order to be feasible in today's economic 
environment. This legislation would provide that assistance.

                          legislative history

    S. 744 was introduced on May 14, 1997 by Senators Johnson 
and Daschle. A similar measure, H.R. 1212, was introduced by 
Congressman Thune on March 21, 1997. A hearing was held by the 
Subcommittee on Water and Power on June 10, 1997.
    At the business meeting on September 23, 1998, the 
Committee on Energy and Natural Resources ordered S. 744, as 
amended, favorably reported.

           committee recommendations and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on September 23, 1998, by a unanimous voice 
vote of a quorum present, recommends that the Senate pass S. 
744, if amended as described herein.

                          committee amendments

    During the consideration of S. 744, the Committee adopted 
an amendment to authorize grant funding from the Secretary of 
Agriculture rather than the Secretary of the Interior through 
the Bureau of Reclamation. The Committee was aware that the 
District had originally sought assistance from the rural water 
program at the Department of Agriculture, but did not meet all 
program criteria. The Committee also was aware of the comments 
from officials at the Department of Agriculture obtained by the 
Government Accounting Office that direct appropriations would 
be needed at a high cost-share to make the system economic. The 
Committee believes that direct assistance from the Secretary of 
Agriculture is appropriate in these circumstances with the role 
of the Bureau of Reclamation limited to construction oversight.

                      section-by-section analysis

    Section 1 provides a short title.
    Section 2 provides a series of findings related to water 
quality and availability and states the purposes of the Act.
    Section 3 provides a series of definitions.
    Section 4 authorizes the Secretary of Agriculture to make 
grants for the Federal share of the planning and construction 
of the water supply system, describes the service area, 
requires compliance with the National Environmental Policy Act 
(NEPA) and the submission of a final engineering report to 
Congress. The Committee notes that the requirement to comply 
with NEPA is not intended to suggest that such compliance would 
not be required in the absence of the provision, nor to 
indicate that the Committee believes that a full Environmental 
Impact Statement or even an Environmental Assessment is 
necessary.
    Section 5 contains standard language on mitigation.
    Section 6 provides for the use of Pick-Sloan power from May 
1-October 31 through a preference customer at the firm power 
rate. It also requires that the water supply system be operated 
on a not-for-profit basis.
    Section 7 provides that this legislation shall not limit 
the authorization for other projects in South Dakota.
    Section 8 contains a series of disclaimers relating to 
water rights.
    Section 9 provides that the Federal share will be 80% of 
the costs.
    Section 10 provides that the local share will be 20% of the 
costs.
    Section 11 authorizes the Secretary of the Interior, 
through the Bureau of Reclamation to provide construction 
oversight and limits the administrative costs to 3% of the 
total project construction budget.
    Section 12 authorizes $3,600,000 in appropriations with 
appropriate indexing.

                   cost and budgetary considerations

    An estimate of the cost of this measure has been requested 
from the Congressional Budget Office, but has not been received 
as of the date of filing of this report. When the estimate is 
received, the Chairman will have it printed in the 
Congressional Record for the advice of the Senate.

                      regulatory impact evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 744. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 744, as ordered reported.

                        executive communications

    On June 10, 1997 the Commissioner of the Bureau of 
Reclamation, Department of the Interior, testified before the 
Subcommittee on Water and Power and presented the 
Administration's views on S. 744. The pertinent portions of his 
testimony follow:

 Statement of Eluid Martinez, Commissioner, U.S. Bureau of Reclamation


 s. 744, fall river water users district rural water system act of 1997


    S. 744 would direct the Secretary of the Interior to grant 
monies to the Fall River Water Users District Water System for 
the purpose of planning and constructing a water supply system. 
The water supply system would provide water to meet the 
domestic and livestock water needs of 660 residents in Fall 
River County, South Dakota, and would assist in the mitigation 
of wetland areas. Under terms of the legislation, the Western 
Area Power Administration would be directed to make available 
energy and capacity to meet the pumping and incidental 
requirements of the water supply system at the firm power rate. 
S. 744 would authorize $3.6 million for the planning and 
construction of the system.
    The Administration opposes this legislation. Long-standing 
Reclamation policy for municipal, rural, and industrial water 
supply projects requires that non-Federal interests repay, at 
current interest rates, 100 percent of project costs. In 
contrast, S. 744 would require the Federal government to pay 80 
percent of the planning and construction costs.
    The Administration opposes the authorization of new single-
purpose municipal and industrial water supply projects for 
rural areas through the Reclamation program, unless the needs 
of Native American communities justify Department of the 
Interior involvement. The rural development mission area at the 
U.S. Department of Agriculture (USDA) is dedicated to the 
issues facing rural communities. Congress has authorized three 
Federal agencies within USDA to accomplish this task (the Rural 
Utilities Service, the Rural Housing Service, and the Rural 
Business-Cooperative Service). For example the Rural Utilities 
Service provides grants and low interest loans for rural water 
and wastewater systems. If Congress wishes to consider 
authorizing additional water development assistance for rural 
areas, such projects should be authorized within the framework 
of USDA's rural development mission area. We believe this would 
be more appropriate than making it a Department of the Interior 
responsibility.
    Although feasibility reports were prepared by private 
sector firms, the feasibility reports do not meet Reclamation 
standards for determining project feasibility. The cost 
estimates shown in the reports do not appear to include funding 
for meeting National Environmental Policy Act requirements, as 
well as cultural resources and environmental mitigation 
activities.
    In addition, the bill is silent on which entity would take 
title to the project once it is constructed and does not ensure 
that the United States will have no liability associated with 
the project.
    This concludes my remarks. I would be happy to answer any 
questions you may have.

                        changes in existing law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 744, as ordered 
reported.

                                
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